Develop a deep bond market: IMF

Dhaka,  Wed,  20 September 2017
Published : 13 Jun 2017, 12:42:19
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Develop a deep bond market: IMF

Develop a deep bond market: IMF
FE Online Report
The corporate bond market in Bangladesh is nearly non-existent while the government bond market is relatively underdeveloped.

Making the observation, the International Monetary Fund (IMF) has stressed on developing a deep bond market to finance the fiscal deficit without ‘resorting to financial repression (such as forcing banks to buy government debt) or potentially risky foreign borrowing’.

IMF also pointed out that the large issuance of National Savings Certificates (NSCs) reduces the demand for Bangladesh government bonds and inhibits the development of other investment vehicles such as mutual funds.

“Thus, both government and the corporate bond markets are relatively small compared to other countries in the region,” said the international financial institution in its latest report on the Article IV consultation.

IMF was of the view that ‘steps to develop a deep and well-functioning government bond market will be needed’ and it could be start with the ‘execution of a reliable government borrowing and debt management strategy and the development of a base of domestic institutional investors’.

- AK
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